Google's 'Project Glass': A Huge Threat To Privacy?

In my last article, Google's (NASDAQ:GOOG) 'Project Glass': An Over-hyped Hobby, I provided my reasoning for why I don't believe Project Glass will be socially acceptable to use in any public area. I wrote this follow-up, since it has recently occurred to me that Project Glass might also meet with a number of legal challenges, on top of the social challenges, over the use of advanced tracking, facial recognition, and recording technology.

Google Doesn't Understand Privacy or Security

As Google CEO Eric Schmidt has made abundantly clear, Google's stance on privacy is "if you're doing something that you don't want anyone to know, maybe you shouldn't be doing it in the first place." He tries to justify Google's attitude towards privacy, by pointing out that the U.S. government could find out anything about anyone if they needed to... "we are all subject in the United States to the Patriot Act and it is possible that all that information could be made available to the authorities." While it's true that the Patriot Act implies that big brother is always watching, it is also true that Google is not the Federal Government.

If Google has its way, everyone in the world will become a walking security camera. Although this sounds wonderful, if you are gung ho on the principle that security at the expense of surrendered privacy is no vice, I don't agree with this argument, and suspect this device would ultimately produce a nightmarish scenario for everyone's information.

Google Image Search + Project Glass = Privacy Nightmare

One of Google's current offerings, "Google Image Search," is in the early stages of what could become one of the most pervasive technological innovations ever conceived. This software is designed to enable you to use a picture to identify an unfamiliar object. My understanding is that Google Glass will use this software to identify objects and places and eventually to identify people. I suspect the "explorer edition" of Google Glass is intended for tourists who desire a walking, talking guide. My gut tells me it will be used for much more. Have you ever worried that a photo of yourself in an appropriate or perhaps inappropriate situation that you don't want the world (or a prospective employer) to know about, might wind up on the internet in a way that identifies you? If Google can achieve mass adoption of Project Glass, and succeed at mastering object and facial recognition, everything imaginable will become searchable.

Although devices such as smartphones are used to take pictures, and record video, none employs the kinds of intrusive hardware that I believe Project Glass has readily equipped. I suspect Project Glass is equipped with a camera that could be perpetually sensing the surrounding area. This camera is likely able to identify people/places/things based on pictures from "Facebook," "Google +," and "Google Image Search." Because the device is always on your face, it is always facing out, and is able to record more information about your journey than would otherwise be possible.

I suspect Google aims to monetize this data. Google currently makes its money by collecting data from its users and selling it, so I guess it seems natural that Google would create a device that creates additional data.

Conclusion

Project Glass will likely never achieve mass adoption because it is too expensive, obstructs your face, and doesn't serve a practical function. However, even if for some reason it does catch on among a niche crowd, we can be thankful that at least one private businesses has taken the right approach by preemptively banning its use on its premises. I am confident that many more will follow suit, and that the device will ultimately be banned from being used at most public and private places. Perhaps Google will even be forced by industry practices or laws, to implement a negative option, in which people can opt out of being identified by Google's system.

Federal and State government officials will eventually step in and protect the right to privacy of every American citizen. When this day comes, devices such as Project Glass will be banned by law, custom, or good manners, from use in public, and limitations will be placed on the type of data that can be collected. Currently, very few limits exist, and therefore, Google is free to see how far it can go to make money from these products. If governments begin regulating this type of technology, or many people demand an opt out right, the data collected will be less and less valuable, earnings from the technology will fall dramatically, and Google's profitability will suffer. European courts have already hinted that they are prepared to introduce said penalties, by blocking Google's operations, if it refuses to adhere to the EU "right to be forgotten." In the EU, citizens are guaranteed the right to opt out of a service at any point, and take their data with them. This directly conflicts with Google's business, and will impact Google's ability to make money in Europe.

The Business model employed by Google will likely face a number of challenges in the years ahead. As consumers come to realize the dangers of the kind of technology being used by Google, I suspect they will demand a variation of the "right to be forgotten." I think many people, when given the legal right, will demand their data back, and choose to opt out. Although Google is a great company, I would not be a buyer at this level. I suspect that Project Glass will end up a multi-billion dollar loss, and earnings will eventually suffer due to laws that will limit the kind of data Google can monetize. At the current price, the stock seems priced for perfection, and I see far too many things that could go wrong.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.